Analysts project 32% return on equities’

The equity market could close with a year-to-date return of 32.05 per cent despite cash demand for the Yuletide and long holidays that tend to strain people financially, analysts have said.

The stock market closed on the eve of the Christmas with a year-to-date return of 31.91 per cent.

Analysts at FSDH Securities said they expected the market to round off within the remaining three trading days before the end of 2012 to close the year at 32.05 per cent.

“We remain positive about the outlook of the equities market in the next few weeks. We expect the NSE All Share Index to close the year in the region of 32.05 per cent year to date. As a result of the festivity we expect intermittent upside coupled with profit taking to persist for the remainder of 2012,” FSDH stated in latest market review.

The latest forecast followed the trend of optimism that has continued to trail equities, which are set to record their best performance in five years.

Investment advisors at Cowry Asset Management Limited, FSDH Securities Limited and GTI Capital Limited among others had said the stock market would neutralise intermittent profit-taking dips and expected increase in demand for cash by the year end with upswings from bargain hunting and portfolio rebalancing as investors await full year returns of quoted companies.

Analysts had stated that with the significant capital appreciation that delivered about N1.4 trillion capital gains in the third quarter, the market would witness a mix of bargainhuntingand profit-taking in the remaining months, with the thin-edge going to the upside by the end of the period.

Analysts at Cowry Asset said the releaseof companies’thirdquarter results particularlyfrombanks and the continued influx of foreign portfolio investorsmay possibly push theASI beyonditscurrentposition.

They noted that the expectations of final approval of the new Pension Fund InvestmentGuideline could trigger mild market rallies as PensionFund Administratorsre balance their port folio store flect new threshold.

Investment advisors at FSDH said the macroeconomic developments in Nigeria and initiatives in the equities market should further drive the equities performance in the remaining period of the year.

“Our expectation is hinged on the premise that most companies results released up till date have shown improved performances with wide margins against previous years. Albeit there are some challenges which may adversely impact the market, we are of the opinion that the equities market will close year 2012 remarkably better than it recorded in the last five years,” FSDH stated.

Analysts said they expected the ASI to achieve a growth rate of 25.46 per cent in the second half of the year, thus nudging the full-year return to 32.05 per cent.

Following the review and expectations of the financial market in the next one year, investment advisors at FSDH were bullish on equities and recommended portfolio allocation of 30 per cent, 10 per cent, 20 per cent, 20 per cent and 20 per cent in favour of equities, fund placement, treasury bills, mutual funds and bonds respectively.

Looking beyond 2012, analysts at FSDH said their model portfolio should deliver a return of 16.17 per cent within the next one year given the prevailing macroeconomic situations.

“An equity portfolio that invests in our carefully selected stocks, following the fund allocation and abiding by both entry and exit prices, should be able to record a return of 19.88 per cent. Meanwhile, the return on individual stocks is made up of both capital appreciation and dividend payments,” analysts advised.